IN the middle of February 2008, I was on holiday for a week in Havana, Cuba.

There were a couple of messages on my mobile phone, one saying ‘Ring the Chancellor of the Exchequer, Alastair Darling, immediately’, the other saying ‘ring the Prime Minister, Gordon Brown, as soon as you can’.

It is unusual to have both looking for you at the same time. And so, rather obviously, I knew something was up.

I rang them back through the Downing Street switchboard and managed to find Gordon first. “Nick, we’re going to take Northern Rock into public ownership. The announcement will be made next Monday”, I said “Gordon, I’m in Cuba, all the banks are publicly owned.”

“It’s only temporary,” he said.

So I got myself back to the Commons, and arrived just in time on the Monday, to hear the Chancellor’s statement, reluctantly taking Northern Rock into public ownership. I sat next to Doug Henderson MP, on the Labour benches, and I think it’s the only time that I’ve sat next to Doug with a deeper suntan than his.

What had gone wrong?

The Labour Government did not want to take Northern Rock into public ownership, but by that stage there really was nothing left to do. Most people do not, or rather did not, think very deeply about financial services back in 2007.

People still thought of Northern Rock as a demutualised building society, taking in customer deposits and lending to people who wanted to buy houses with a loan secured against the value of the house. We now know that this is not what was going on.

Something like 25% of Northern Rock’s lending was covered by customer deposits, the rest was raised on the money markets and lent in a headlong rush to grow market share for the bank. In some cases, the bank lent more than the asset against which it was secured could be expected to cover. The ‘going for growth’ strategy pushed caution - and even common sense - to one side.

Alastair Darling describes in his memoir being at a banking conference on September 14 2007 and looking at TV coverage of the queues forming outside Northern Rock’s branches as depositors tried to salvage their savings.

He recounts how the Governor of the Bank of England leant over his shoulder, and said: “They’re behaving perfectly rationally, you know.” This may have been true, but it was hardly a solution to the problem.

There is something to be said for the Governor’s view, that the bankers were the architects of their own misfortune. Unfortunately, they were the architects of a lot of other people's misfortune as well.

In 2006, George Osborne described a Conservative Party report that recommended the complete deregulation of the UK mortgage market as “the most impressive and comprehensive analysis of the state of the British economy produced by any political party in recent times.”

The only way to stop a run on the bank was to guarantee the deposits, which is what Alastair did. Looking back on it all, I think that Gordon Brown and Alastair Darling were right to try to find a private sector way forward. That Autumn, in 2007, when the bank got into trouble, it was the right idea, but at the wrong time.

Eventually the bank had to be taken into public ownership. So there was I, then Labour's deputy chief whip (I became the chief whip a few months later) steering the Government’s bank nationalisation legislation through the House of Commons.

I had spent my life in Labour politics standing up to Trotskyite entrists who demanded the nationalisation of the banks without compensation, and now I was in charge of implementing their programme. I pointed the irony of this out to one of the treasury ministers, who said “It’s only transitional, comrade”.

The bank remains in public ownership to this day. For the future, I think the present Government's approach is essentially correct. It is a continuation of the last Labour Government's policy. Selling part of the bank and managing the assets of the rest of it over a much longer period is probably the best that can be done.

Like many Labour politicians, I would like to see Northern Rock re-emerge as part of the mutual Building Society movement. The best way to achieve this would be for another mutual or combination of mutuals to buy the bit that is for sale. Although I think mutualisation is a desirable outcome, I do not think it should be achieved at the expense of the taxpayer. The Government intervened with the taxpayers money because it was in the national interest to do so. It is my strong view that it is also in the national interest to try and get the taxpayers money back.